Interdependencies of Environmental Quality, Poverty, and Green Growth: A Simultaneous Equation Analysis Across Indonesian Provinces

Abstract

This study explores the interrelations among environmental quality (EQ), poverty (POV), and green growth (GG) across 34 provinces in Indonesia from 2015 to 2023, employing a simultaneous equation model (SEM) to address the gap in prior research which often overlooked the concurrent analysis of these variables. It was found that POV exerts a significant negative impact on EQ, quantified at a reduction of 0.235 percent. Conversely, GG contributes positively to EQ, enhancing it by 0.197 percent. The findings underscore the necessity for policies that integrate environmental, social, and economic considerations, advocating for inclusive and sustainable development strategies. These strategies are pivotal for fostering economic opportunities that enhance community welfare while ensuring environmental sustainability. The study concludes that a nuanced understanding of the relationships between these endogenous factors is crucial for effective policy formulation, highlighting the need for a balanced approach that harmonizes developmental objectives with environmental stewardship.